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Dismissal ends MRHD's long legal battle with former Sioux City riverboat casino owner

DES MOINES -- The dismissal of a lawsuit involving the former Argosy Sioux City riverboat casino owner and its local nonprofit partner has ended years of litigation that lingered long after the casino was sent floating down the Missouri River.

Missouri River Historical Development, the Belle of Sioux City, which operated the Argosy, and its parent company, Penn National Gaming Inc., on July 31 filed a joint dismissal of a lawsuit and counter lawsuit in Polk County District Court in Des Moines. Each side will pay for its own legal expenses.

The ongoing litigation hadn't hampered MRHD's ability to distribute gambling revenues from Sioux City's Hard Rock Hotel & Casino to local charitable and nonprofit organizations, MRHD president Dakin Schultz said, but now that it's settled, it will be one less distraction for board members.

"We are pleased to see that this matter has come to an end," Schultz said.

In September 2012, in the midst of a bitter dispute, Belle of Sioux City sued MRHD, the state-licensed nonprofit gaming group that had held Woodbury County's gambling license with Belle, for breach of contract. Belle had claimed that MRHD schemed to replace the Argosy with another operator before their 20-year contract expired in July 2012.

MRHD and the casino operator had been unable to come up with a long-term contract extension that would have included a land-based casino, and the Iowa Racing and Gaming Commission took the unprecedented step of putting Woodbury County's license up for grabs and began accepting proposals for a new casino.

MRHD denied Belle's charges and countersued, claiming that Penn National interfered with MRHD's prospective relationships with other potential operators by sending letters threatening legal action against them. MRHD also claimed that Penn's actions prevented or delayed it from negotiating a more lucrative land-based casino agreement.

The IRGC in June 2013 awarded a gambling license to MRDH and the Hard Rock's owner, SCE Partners, for the $130 million casino complex, which opened in August 2014 in downtown Sioux City.

The lawsuits had been scheduled to go to trial next month, but a judge's ruling in May decided two issues at the core of the Belle's suit and MRHD's countersuit.

District Judge David May ruled that MRHD had the right to begin searching for a new casino operator prior to the expiration of its agreement with Belle so that it could have a new deal in place once its contract with Belle expired. May said MRHD was not in breach of contract, effectively dismissing Belle and Penn's claim that they had the exclusive rights to negotiate a new agreement with MRHD.

May also dismissed MRHD's counterclaim that Penn and Belle interfered with their search for casino operators after ruling that the letters sent to those potential operators by Penn were not improper and did not constitute interference.

Mark Weinhardt, a Des Moines attorney who represented Belle and Penn, did not immediately return messages seeking comment.

The dismissal is the last in a series of rulings and settlements that have occurred since the riverboat casino was closed in July 2014 and later sold and floated away to an Illinois salvage company.

The Iowa Supreme Court in May 2016 ended a separate legal battle when it denied the Belle's request to review an Iowa Court of Appeals ruling that upheld previous rulings that led to the casino's closure.

In March, Belle and Penn agreed to pay $1.5 million to the Community Action Agency of Siouxland to settle another lawsuit in which the Sioux City nonprofit had sought unpaid revenue-sharing funds from the gambling companies. Iowa casino operators are required to partner with licensed gaming nonprofit organizations such as MRHD, which collect and distribute a portion of gambling profits to charitable and civic organizations. The Belle had withheld several months of payments to MRHD after filing its breach of contract lawsuit.

Bowling alley gets new life
GALLAGHER: Western Christian opens Bargain Alley in Hull

HULL, Iowa -- The newest retail site in downtown Hull has given life to the old bowling alley. Step in to the Bargain Alley Thrift Store, a monstrosity covering 9,800 square feet, and you won't find strikes, spares and burgers as you might have years ago at the Family Bowl & Cafe, founded by the late Clayton and Mae Vis in 1976.

What will you come across? All sorts of clothing, furniture, home deco and more offered at bargain prices; cleaned, marked and presented for sale by staffers and volunteers seeking to boost the fortunes of Western Christian High School.

This store, after all, is the Wolfpack baby.

"The school board one year ago kind of brainstormed about seeking out additional sources of revenue," said Wes Fopma, Western Christian director of development. "I began doing some research and found several thrift stores that support their projects and operations."

The long-running S.O.S. Thrift Store benefiting St. Mary's Catholic Schools in Storm Lake, Iowa, would be one example.

Fopma then joined former principal Dan Barkel (now superintendent of schools at MMCRU) in seeking locations in Hull for a possible thrift store venture. They came to the old Family Bowl & Cafe, which had been closed for more than three years. The building was owned at the time by Iowa State Bank.

Fopma was soon able to make a presentation to three principals involved with the bank. Those men, in turn, received approval from the bank's board of directors to give the site to Western Christian for the purpose of opening a thrift store. The transaction, as it were, closed last December 31.

On Jan. 18, Western Christian volunteers began to demo the interior of the structure, a portion of the project that took 600 to 700 hours. Western Christian High School student Dolan Van De Stroet then created a design for the store's layout that he shared with subcontractors.

The father-and-son team of Dave and Scott Kroese did much of the carpentry, while others handled insulation and windows. Retired teachers such as Jim Eekhoff, Henry Eekhoff, Dwight Baker, Ken Draayer and Aldie Altena spent hours upon hours at the site, readying it for racks of clothes, household wares, furniture displays, pictures and more.

"In six months, we totally changed the building," Fopma said.

When the call went out for the receipt of donated clothing and more, folks around Hull responded. The place soon filled with an impressive assortment of...well, just about everything. On Wednesday, I witnessed a stream of shoppers seeking everything from back-to-school items to appliances. Bargain seekers were met by a host of Bargain Alley staffers and volunteers, many of whom have ties to Western Christian.

"The volunteering is kind of addictive," said Jennie Pluim, a 1953 grad of Western. "You can volunteer anywhere from one hour to several hours. I've been here almost every day since it opened."

The opening came on July 12 during Hull's Summer Fest celebration. Fopma said shoppers and donors have come from Western Christian as well as the schools serving Boyden-Hull, Trinity Christian and more.

A portion of the old bowling alley remains, which I liked to see. The front counter upon which Pluim worked on Wednesday was, in fact, one of the lanes. Co-manager Kari Hoekstra pointed to several painted bowling pins and balls for sale.

"The old restaurant portion of the building is our Furniture Alley," said Hoekstra, who noted that all sign displays for wares are printed in English and Spanish.

"People may donate items during our business hours, or they may ask us to come to their home to pick up items for donation," Hoekstra said.

"We keep our prices low to keep merchandise moving," she added.

There is no price, however, on the old Family Bowl & Cafe sign. That might be the only item without a price tag, currently.

When thinking back on the past year or so that Fopma has been involved in this task, he recalled one particular sight that had him shaking his head. Randy Van't Hof, of nearby Sioux Center, contacted Fopma to see if anyone had designs on the other bowling lanes. Fopma said Van't Hof could have them if we wanted to come get them.

"They took apart the lanes in three-pieces each," Fopma said. "Each piece weighed 700 to 800 pounds and we couldn't get a forklift in to move them. So, it took 15 guys or so to grab each piece and walk them out the front door."

Teamwork, it is called. And it's a concept the folks at Western Christian know well, on the field, on the court, and, apparently, even in the old bowling alley.

NTSB: Oil train was just below speed limit before derailing near Doon

DOON, Iowa -- The BNSF Railway train that spilled 160,000 gallons of crude oil into floodwaters in rural Lyon County was going just below the speed limit when it derailed in June, the National Transportation Safety Board found in a preliminary report of the accident issued Thursday.

Maximum authorized speed on that section of tracks was 49 miles per hour, 1 mph above the speed NTSB investigators estimated the train was traveling when the emergency brakes were applied at around 4:35 a.m. on June 22. Of the 33 tank cars that left the tracks, 10 were breached. The damaged cars sustained tears, punctures or damaged valves, with some of the punctures as large as 3 feet by 3 feet. 

The area had received between 5 and 7 inches of rain in the 48 hours before the accident, washing out track and flooding a tributary of the Little Rock River and farm fields adjacent to the derailment site. Most of the leaking crude that spilled was contained to a small triangular area between the tracks and two roads, Garfield Avenue and 270th Street, about a 1 mile south of the small Lyon County town of Doon. But some oil reached the Rock River and promoted the evacuation of 18 to 20 people, the report said.

In the aftermath of the accident, officials from BNSF, the U.S. Environmental Protection Agency, Iowa Department of Natural Resources and Lyon County, worked together to mitigate and recover the crude oil. Crews also have been replacing topsoil contaminated by the spill.

Remaining crude also has been removed from the damaged tankers, which were stacked in a nearby field. A berm was built around the cars to keep any additional leaking oil from entering the flood plain.

NTSB investigators completed on-scene work in Lyon County on July 10. Additional investigation to examine parts removed from one of the tank cars is planned at the agency's laboratories in Washington D.C.

The 110-unit train was moving nearly 2.5 million gallons of crude from a terminal in Alberta, Canada to Houston, Texas for ConocoPhillips, according to the report. Each car carried about 29,000 gallons. The shipper classified the mixture of heavy crude and diluent mixture as "Hazard Class 3, Packing Group 1 (highest degree of danger.)

The derailed tankers were older cars that were upgraded to DOT-117R safety standards. Federal regulations require such tankers to be retrofitted or removed from service by 2020.

After the derailment near Doon, BNSF warned shippers of plans to ban retrofitted cars in all new contracts, the news service Reuters reported, citing sources familiar with the discussion.

Editor's note: An earlier version of this story mischaracterized the estimated speed of the train in relationship to the speed limit for that section of track.

Justin Wan, Sioux City Journal 

Workers are shown July 10 next to BNSF Railway oil tanker cars that derailed in rural Lyon County June 22. The National Transportation Safety Board released a preliminary report on the wreck Thursday. 

Tim Hynds, Sioux City Journal 

University of South Dakota quarterback Austin Simmons throws a pass during a practice Thursday.

Insurance firm says South Sioux didn't have sewer coverage for Big Ox

LINCOLN, Neb. -- An insurance company said in a new court filing that if it's ordered to pay claims related to lawsuits filed against South Sioux City pertaining to odors from Big Ox Energy, a third company should pay part or all of its costs.

Philadelphia Indemnity Insurance Company on Monday filed a third-party complaint against Arthur J. Gallagher Risk Management Services, saying the company issued a policy to South Sioux City that did not include coverage of the city's sewer system.

The city sued Philadelphia Indemnity and Charter Oak Fire Insurance Company in U.S. District Court in Lincoln, Nebraska, last August, seeking a court order requiring them to cover tort claims filed by residents over losses related to sewage treated by Big Ox and the resulting discharge and backup of hydrogen sulfate gas from the sewer system into homes.

The resulting odors have led to the displacement of numerous residents, and 15 lawsuits have since been filed in Dakota County District Court against the city and Big Ox. The lawsuits allege that Big Ox and the city failed to maintain, operate and modify wastewater treatment facilities and sewer systems to handle waste from the plant and prevent the release of toxic gases.

Philadelphia Indemnity says in its third-party complaint that South Sioux City, through the Arthur J. Gallagher office in Sioux City, applied for an environmental insurance policy to cover the city's sewer system, a requirement under its contract with Big Ox. Philadelphia Indemnity says it provided a quote to Arthur J. Gallagher that did not include sewer coverage because the system schematics required for coverage were not submitted. Arthur J. Gallagher later asked for issuance of the policy as quoted, and it did not include sewer coverage.

Philadelphia Indemnity says it was never informed that the city's contract with Big Ox required sewer system coverage.

The Pennsylvania-based company says the policy issued to the city does not entitle it to receive coverage for legal claims. The case is scheduled for trial in May.

Philadelphia Indemnity said that if it's determined that the city is entitled to coverage, the insurance company is entitled to compensation from Arthur J. Gallagher for all or at least a portion of the claims.

Shortly after Big Ox, which converts organic waste from local industries to methane, began operations in September 2016, residents of a five-block area near the plant began to complain of odors inside and outside their homes and health problems. They are seeking at least $7.4 million for reimbursement of relocation costs and other damages in their lawsuits against the city and Big Ox.

The Denmark, Wisconsin-based company maintains that faulty plumbing in the homes was the primary cause of the odor issues.

The city and Big Ox have paid hundreds of thousands of dollars to reimburse homeowners for living expenses since they were displaced. The city has also spent $1.5 million for sewer upgrades and modifications.

The Nebraska Department of Environmental Quality recently issued a notice of violation to Big Ox alleging violations of state air quality regulations and the plant's air quality construction permit. The company also was given a separate notice of violation connected with a sludge spill caused by a problem with digesters at the plant.